House approves €168.9mln irrigation loan amid sharp debate over phase I performance
Presenting the proposal to the House, Finance Minister Henry Musasizi said the project would establish 427 solar-powered irrigation systems across the country to boost agricultural productivity and increase rural incomes, particularly among coffee-growing communities
KAMPALA, June 10, 2026 — The 12th Parliament of Uganda has today approved a government proposal to borrow up to €168.98 million [approximately Shs687.8 billion] from United Kingdom Export Finance [UKEF] and Citi Bank to finance Phase II of the Solar Powered Irrigation Systems Project, despite concerns from some legislators over the performance of the project’s first phase.
Presenting the proposal to the House, Finance Minister Henry Musasizi said the project would establish 427 solar-powered irrigation systems across the country to boost agricultural productivity and increase rural incomes, particularly among coffee-growing communities.
“The goal of this project is to contribute to increased coffee yields through the provision of water for irrigation in 126 districts,” Musasizi told the legislators.
He noted that Phase I of the project had achieved more than 99 percent physical completion, with 434 irrigation systems constructed nationwide.
“To date, Phase I has delivered verifiable economic benefits across the country. Collectively, these initiatives have enhanced water security and productivity for 206,465 households and a total population of 908,447 people,” he said.
Musasizi argued that a second phase was necessary as climate change continues to intensify, reducing water availability for agriculture and exposing farmers to prolonged dry spells.
“Farmers are losing significant amounts of crops due to extended dry seasons, which in turn affects their livelihoods,” he said.
According to the minister, the new phase is expected to directly benefit about 2,562 households, equivalent to approximately 11,785 people.
He added that implementation would leverage existing agricultural extension structures at sub-county, parish and district levels through the Ministry of Agriculture, Animal Industry and Fisheries [MAAIF] and its Coffee Department.
However, the proposal sparked a heated debate, with Opposition legislators questioning the rush to approve fresh borrowing before Parliament had fully assessed the impact of Phase I.
Leader of the Opposition [LoP] Joel Ssenyonyi pleaded that lawmakers should first establish whether the initial phase had delivered value for money before committing to a new loan.
“We are being rushed into Phase II. Why don’t we first take stock of Phase I?” Ssenyonyi asked.
“Take stock, deal with all the challenges in Phase I because they have not been addressed. Now you want us to quickly approve more money.”
He questioned whether government could guarantee the success of the second phase if challenges from the first phase remained unresolved.
“If you are struggling with Phase I, what guarantee do you have that Phase II will succeed?” he said.
Abim District Woman MP Joyce Ayoo supported the loan but criticised the apparent exclusion of Karamoja from the list of beneficiary areas.
“When we talk about regions affected by climate change, the first region that comes to mind is Karamoja. Why isn’t Karamoja included in the project?” she asked.
Ayoo argued that communities in Karamoja urgently require irrigation infrastructure to mitigate the effects of recurring droughts and climate shocks.
Agriculture Minister Frank Tumwebaze defended the loan proposal, describing irrigation as essential for safeguarding agricultural production amid increasingly unpredictable weather patterns.
“We stand at below two per cent irrigation coverage,” Tumwebaze said.
“In the past, we did not invest heavily in irrigation because Uganda enjoyed two predictable rainy seasons. Today, crop failure has become more predictable than crop yield.”
He urged legislators to prioritise support for smallholder farmers who cannot afford large-scale irrigation investments.
“I appeal to you to make an exception and pass this loan because it will support smallholder farmers who cannot access financing from the Uganda Development Bank or the Agricultural Credit Facility to invest in major irrigation systems,” he said.
Tororo South County MP Fredrick Angura also backed the proposal, saying communities that benefited from Phase I continued to demand similar interventions.
“The challenges we encountered in the first phase have not diminished public interest in irrigation,” Angura said.
“Our communities are expecting more. Rainfall patterns have become unreliable, and it is time we supported this loan to improve livelihoods,” he said.
Katikamu South MP Hassan Kirumira also strongly opposed the borrowing, arguing that the first phase had failed to meet public expectations and contributed to the electoral defeat of some legislators who promoted it during the 11th Parliament.
“This particular project caused many of our colleagues to lose their [political] seats because they marketed it to voters who were ultimately disappointed by the implementation,” Kirumira said.
He described the proposed financing as expensive and non-concessional, warning that Uganda should focus on borrowing prudently.
“We must borrow right and borrow smart,”he said.
Mbale City Industrial Division MP Karim Masaba attempted to halt debate by moving a procedural motion to suspend consideration of the loan, arguing that legislators had not been given adequate time to study the agreement.
“Passing a motion that members do not fully understand is dangerous because the consequences will ultimately affect ordinary citizens,” Masaba said.
However, his motion was defeated after failing to attract sufficient support from fellow legislators.
According to the National Irrigation Policy, which aims at agricultural transformation through irrigation, sustainable irrigation development will enhance food and livelihood security and reduction of poverty in the country. Irrigated agriculture can significantly reduce key production risks associated with unreliable rainfall and hence raise farmer incomes.
It is said reliable irrigation service delivery can also persuade farmers to invest in better production practices and to diversify into higher value farming systems. It is estimated that about 3 million hectares of land could be brought under irrigated agriculture if the full potential of irrigation was exploited.
Loan structure
According to the government’s brief to Parliament, the €168.98 million financing package comprises two facilities. UKEF will provide €148.51 million, while Citi Bank will extend a commercial facility of €20.47 million.
Public debt management
The government also informed Parliament that Uganda’s public debt stood at US$ 34.86 billion by the end of December 2025, equivalent to 52.7 percent of Gross Domestic Product [GDP].
Of this, external debt accounted for US$15.84 billion, while domestic debt stood at US$ 19.02 billion.
The figures indicate a steady rise in public debt from US$ 25.59 billion in June 2024 to US$ 32.24 billion in June 2025 before reaching US$ 34.86 billion six months later.
Government said the proposed borrowing had already been incorporated into Uganda’s Debt Sustainability Analysis and the fiscal framework for the 2026/27 financial year.
It maintained that the loan would not breach the country’s long-term debt sustainability thresholds and said public debt was being managed through fiscal consolidation measures, including enhanced domestic revenue mobilisation, expenditure controls and prioritisation of growth-enhancing investments.
Government further cited the Public Investment Management System Policy and Strategy, which is intended to strengthen the preparation, appraisal, approval and management of public projects before they are submitted to Parliament for consideration.
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